Cadbury rejects Kraft, reports robust trading

Cadbury showcased robust 2009 results and an upbeat outlook yesterday in its last move to rebuff US food giant Kraft Foods' £10.5 billion (Dh62.1bn) hostile takeover bid.

In a final defence document, the British confectioner said Kraft's "derisory" offer valued Cadbury lower than any comparable deal in the sector and that its standalone value had risen since the Kraft bid emerged last September.

"Our performance in 2009 was outstanding. We generated good revenue growth despite the weakest economic conditions in 80 years," said Chief Executive Officer Todd Stitzer.

Kraft's cash and share bid is currently worth 762 pence a share compared with Cadbury's closing price of 781 pence on Monday. Cadbury's share opened down two pence at 779 pence yesterday.

Investors say a winning bid needs to be 800 pence or above. Cadbury said its 2009 underlying sales rose five per cent with the second half surging to six per cent. It achieved an operating margin of 13.5 per cent against a previous company forecast of 13.3 per cent and said its 2009 dividend would rise 10 per cent.

Cadbury Chairman Roger Carr has dismissed Kraft's offer and has questioned the ability of Kraft CEO Irene Rosenfeld to raise her bid after Kraft's top shareholder Warren Buffett warned the company not to overpay.

"Kraft's offer is even more unattractive today than it was when Kraft made its formal offer in December… Don't let Kraft steal your company with its derisory offer," Carr said.

Carr and Stitzer are confident of meeting Cadbury's longer-term targets, which include annual sales growth of five to seven per cent from 2010, lifting operating margins to 16-18 per cent by 2013.

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